Dollar Wavers as Markets Await FOMC Minutes and Trade Developments

On July 8, 2025, the U.S. Dollar Index (DXY) edged up to near 98.00, but failed to sustain early gains, reflecting cautious market sentiment. President Donald Trump’s tariff announcements targeting Japan and South Korea, alongside anticipation for the Federal Reserve’s June FOMC Minutes on July 9, have kept investors on edge. With trade tensions and monetary policy in focus, clear communication from policymakers is essential to stabilize currency markets and prevent volatility.

Trade Tensions Unsettle the Dollar

The DXY’s advance to multi-day highs near 98.00 was tempered by renewed tariff concerns after Trump announced duties on Japan and South Korea, with rates up to 25%. The August 1 tariff deadline looms, following a three-week reprieve from July 9, raising fears of a 0.5% global GDP cut, per International Monetary Fund estimates. These tensions weakened risk appetite, limiting the Dollar’s gains as investors await clarity on trade negotiations, impacting currencies like the Japanese Yen, which pushed USD/JPY to multi-week highs near 147.00.

Currency Movements and Policy Signals

EUR/USD stabilized above 1.1700 after a weak start, while GBP/USD recovered to around 1.3600 despite earlier two-week lows, driven by the Bank of England’s upcoming Financial Stability Report. AUD/USD rebounded above 0.6500, supported by a hawkish Reserve Bank of Australia stance. Investors await the FOMC Minutes for insights into rate cut odds, with September cuts at 78% per CME FedWatch Tool, following June’s robust 147,000-job Nonfarm Payrolls report.

Commodities Reflect Mixed Sentiment

WTI crude oil approached $69.00 per barrel, and was up 0.59%, buoyed by demand optimism, while gold lingered a little bit above $3,300 and silver fell below $37.00, pressured by a firm Dollar and rising U.S. yields. Policymakers must address trade uncertainties and provide clear monetary guidance to curb market swings. Investors should monitor the FOMC Minutes, weekly U.S. crude inventory data, and trade talks. Without coordinated action, the Dollar risks further volatility, with DXY potentially testing 98.50 by late July.